Quote from smilingsynic:
The principle that one must let winners ride is often underemphasized in favor of the principle that one must cut losers short. Imo, it is HARDER for most to let winners ride and EASIER to cut losers. No wonder: all of the research on trading suggests that most traders end up losers anyway, so it is easy to think that all one must do is cut losers to get into the winner's circle.
It is not enough to cut losers. There have to be winners, big winners, to make it above breakeven. This is true at all levels--intraday included.
I bet many traders who bought Enron DID sell when the trend kept going down. Of course, some who bought high held the stock all the way to the end, but most traders don't fall into into that rookie trap more than once or twice. But how many went short and held all the way, enjoying windfall profits? I bet few. Very, very few.
The propensity to cut winners short is my Achilles heel, and I work on it every day. Trailing stops moved as the position goes in my favor has worked well for me.
